WEB NEWS Comments & Business Outlook
CHINANET ONLINE HOLDINGS, INC.
(In thousands)
Three Months Ended March 31,
2016
2015
(US $)
(US $)
(Unaudited)
(Unaudited)
Revenues
From unrelated parties
$
5,012
$
5,661
From related parties
48
63
Total revenues
5,060
5,724
Cost of revenues
3,456
4,868
Gross profit
1,604
856
Operating expenses
Sales and marketing expenses
880
1,185
General and administrative expenses
1,706
1,245
Research and development expenses
426
490
Total operating expenses
3,012
2,920
Loss from operations
(1,408
)
(2,064
)
Other income (expenses)
Interest income
27
29
Interest expense
-
(17
)
Other (expenses)/income
(12
)
32
Total other income
15
44
Loss before income tax expense, equity method investments, noncontrolling interests and discontinued operation
(1,393
)
(2,020
)
Income tax benefit
28
222
Loss before equity method investments, noncontrolling interests and discontinued operation
(1,365
)
(1,798
)
Share of income in equity investment affiliates
-
1
Loss from continuing operations
(1,365
)
(1,797
)
Loss from discontinued operation, net of income tax
(46
)
(25
)
Net loss
(1,411
)
(1,822
)
Net loss attributable to noncontrolling interests from continuing operations
-
34
Net loss attributable to ChinaNet Online Holdings, Inc.
(1,411
)
(1,788
)
Comments & Business Outlook
CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands)
Year Ended December 31,
2015
2014
(US $)
(US $)
Revenues
From unrelated parties
$
31,522
$
37,613
From related parties
743
353
Total revenues
32,265
37,966
Cost of revenues
24,655
31,671
Gross profit
7,610
6,295
Operating expenses
Sales and marketing expenses
4,586
6,916
General and administrative expenses
7,498
5,780
Research and development expenses
2,164
2,660
Gain on deconsolidation of VIEs
(20
)
(266
)
Impairment on equity method investments
874
-
Goodwill impairment and impairment on fixed assets and intangible assets
1,824
4,193
Total operating expenses
16,926
19,283
Loss from operations
(9,316
)
(12,988
)
Other income/(expenses)
Interest income
117
122
Interest expense
(47
)
(52
)
Other income/(expenses)
34
(28
)
Total other income
104
42
Loss before income tax benefit, equity method investments, noncontrolling interests and discontinued operation
(9,212
)
(12,946
)
Income tax benefit
1,496
478
Loss before equity method investments, noncontrolling interests and discontinued operation
(7,716
)
(12,468
)
Share of (losses)/income in equity investment affiliates
(2
)
47
Loss from continuing operation
(7,718
)
(12,421
)
Loss from discontinued operation, net of income tax
(1,465
)
(1,471
)
Net loss
(9,183
)
(13,892
)
Net loss attributable to noncontrolling interests from continued operations
91
154
Net loss attributable to ChinaNet Online Holdings, Inc.
$
(9,092
)
$
(13,738
)
Investor Alert
Item 8.01. Other Events.
On September 8, 2015, ChinaNet Online Holdings, Inc. (the “Company”) received a letter from The NASDAQ Stock Market LLC (“NASDAQ”) notifying the Company that, based on the previous 30 consecutive business days, the Company’s listed security no longer met the minimum $1.0 bid price per share requirement. Therefore, in accordance with NASDAQ Listing Rules (the “Rules”), the Company was provided 180 calendar days, or until March 7, 2016, to regain compliance.
The Company’s stock has not regained compliance with the minimum $1.0 bid price per share requirement. However, NASDAQ has determined that the Company is eligible for an additional 180 calendar day period, or until September 6, 2016, to regain compliance. NASDAQ’s determination was based on the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the NASDAQ Capital Market with the exception of the bid price requirement, and the Company’s written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary. If at any time during this additional time period the closing bid price of the Company’s security is at least $1.0 per share for a minimum of ten (10) consecutive business days, NASDAQ will provide written confirmation of compliance and the matter will be closed.
Deal Flow
CALCULATION OF REGISTRATION FEE
Title of Each Class of
Securities to be Registered
Amount
to be
Registered(1)
Proposed
Maximum
Offering Price
Per Share (2)
Proposed
Maximum
Aggregate
Offering Price (2)
Amount of
Registration Fee
Common Stock, par value $0.001 per share - - -
Preferred Stock, par value $0.001 per share - - -
Warrants - - -
Units - - -
Total
$50,000,000 $5,035(3)(4)
Investor Alert
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
According to the Listing Rule 5810, the Company now has a period of 180 calendar days from such letter, or until March 7, 2016, to regain compliance. Compliance can be achieved by meeting the standard of a minimum bid price of $1 per share for a minimum of 10 consecutive business days at any time during the 180 day period. The Company is currently looking at all of the options available with respect to regaining such compliance.
Comments & Business Outlook
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands)
Six Months Ended June 30,
Three Months Ended June 30,
2015
2014
2015
2014
(US $)
(US $)
(US $)
(US $)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Sales
From unrelated parties
$
15,002
$
15,361
$
9,217
$
10,179
From related parties
468
183
405
182
15,470
15,544
9,622
10,361
Cost of sales
12,291
12,487
7,345
8,665
Gross profit
3,179
3,057
2,277
1,696
Operating expenses
Sales and marketing expenses
2,250
2,095
1,047
1,506
General and administrative expenses
3,307
2,009
2,005
1,022
Research and development expenses
1,063
892
573
442
6,620
4,996
3,625
2,970
Loss from operations
(3,441
)
(1,939
)
(1,348
)
(1,274
)
Other income (expenses)
Interest income
63
60
34
29
Interest expense
(34
)
(32
)
(17
)
(16
)
Other income/(expenses)
31
(3
)
(1
)
(2
)
60
25
16
11
Loss before income tax expense, equity method investments and noncontrolling interests
(3,381
)
(1,914
)
(1,332
)
(1,263
)
Income tax benefit/(expense)
324
(120
)
98
(72
)
Loss before equity method investments and noncontrolling interests
(3,057
)
(2,034
)
(1,234
)
(1,335
)
Share of income/(losses) in equity investment affiliates
2
(58
)
1
(43
)
Net loss
(3,055
)
(2,092
)
(1,233
)
(1,378
)
Net loss attributable to noncontrolling interests
58
93
24
47
Net loss attributable to ChinaNet Online Holdings, Inc.
$
(2,997
)
$
(1,999
)
$
(1,209
)
$
(1,331
)
Management Discussion and Analysis
Total Revenues: For the six months ended June 30, 2015 and 2014, our total revenues were both approximately US$15.5 million. For the three months ended June 30, 2015 and 2014, our total revenues were US$9.62 million and US$10.36 million, respectively.
We derive the majority of our advertising service revenues from the sale of advertising space on our internet portals and from providing the related value-added technical support and services, internet marketing service and content management services to unrelated third parties and to certain related parties. Beginning in the second fiscal quarter of 2014, we elaborated an existing stream of internet marketing service by providing enhanced third-party search engine marketing (“SEM”) services to the SMEs as a strategic supplement to the internet advertising services provided to our clients. We also derive revenue from the sale of advertising time purchased from different provincial satellite TV stations. Our advertising and marketing services to related parties were provided in the ordinary course of business on the same terms as those provided to our unrelated clients. For the six and three months ended June 30, 2015 and 2014, our service revenue from related parties in the aggregate was less than 5% of the total revenue for each respective reporting period.
Our advertising service revenues are recorded net of any sales discounts. Sales discounts include volume discounts and other customary incentives offered to our small and medium-sized franchise and merchant clients, including providing them with additional advertising time for their advertisements if we have unused space available on our websites and represent the difference between our official list price and the amount we actually charge our clients. For advertising services, we typically sign service contracts with our small and medium-sized franchisor and other clients that require us to place the advertisements on our portal websites in specified locations on the sites and for agreed periods; and/or place the advertisements onto our purchased advertisement time during specific TV programs for agreed periods. We recognize revenues as the advertisement airs over the contractual term based on the schedule agreed upon with our clients. Revenue from SEM services is recognized on a monthly basis based on the direct cost consumed through search engines for providing such services with a premium. We recognize this revenue on a gross basic, as we believe that we act as the primary obligor of this transaction, which is considered the most important factor for a gross revenue recognition in accordance with ASC Topic 605, subtopic 45. We also sell effective sales lead information to our clients, which is recognized based on fixed price per sales lead when information is delivered and accepted by clients.
Deal Flow
1.01 Entry into a Material Definitive Agreement.
Comments & Business Outlook
1.01 Entry into a Material Definitive Agreement.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME
(In thousands)
Year Ended December 31,
2014
2013
(US $)
(US $)
Sales
From unrelated parties
$ 38,544 $ 29,932
From related parties
353 361
38,897 30,293
Cost of sales
32,275 16,563
Gross margin
6,622 13,730
Operating expenses
Sales and marketing expenses
7,017 2,574
General and administrative expenses
6,207 7,691
Research and development expenses
2,659 1,995
Loss on disposal of intangible asset
- 315
(Gain)/loss on disposal of VIEs
(266 ) 543
Goodwill impairment and impairment of intangible assets
5,639 -
21,256 13,118
(Loss)/income from operations
(14,634 ) 612
Other income (expenses)
Interest income
122 125
Interest expense
(52 ) (26 )
Other (expenses)/income
(28 ) 5
42 104
(Loss)/income before income tax expense, equity method investments and noncontrolling interests
(14,592 ) 716
Income tax benefit/(expense)
653 (816 )
Loss before equity method investments and noncontrolling interests
(13,939 ) (100 )
Share of income/(losses) in equity investment affiliates
47 (183 )
Net loss
(13,892 ) (283 )
Net loss attributable to noncontrolling interests
154 49
Net loss attributable to ChinaNet Online Holdings, Inc.
$ (13,738 ) $ (234 )
Management Discussion and Analysis
Total Revenues: Our total revenues increased to US$38.9 million for the year ended December 31, 2014 from US$30.3 million for the year ended December 31, 2013, which represents a 28% increase. The increase in our total revenues for the year ended December 31, 2014 was primarily due to the increase in our search engine marketing service revenue during the period, which is discussed in detail in our revenue analysis section below.
Our advertising service revenues are recorded net of any sales discounts. Sales discounts include volume discounts and other customary incentives offered to our small and medium-sized franchise and merchant clients, including providing them with additional advertising time for their advertisements if we have unused space available on our websites and represent the difference between our official list price and the amount we actually charge our clients. For advertising services, we typically sign service contracts with our small and medium-sized franchisor and other clients that require us to place the advertisements on our portal websites in specified locations on the sites and for agreed periods; and/or place the advertisements onto our purchased advertisement time during specific TV programs for agreed periods. We recognize revenues as the advertisement airs over the contractual term based on the schedule agreed upon with our clients. For SEM services, we charge certain percentage of service fees to our customers based on the internet resources cost consumed for their SEM services.
Comments & Business Outlook
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME
(In thousands)
Nine Months Ended
September 30,
Three Months Ended
September 30,
2014
2013
2014
2013
(US $)
(US $)
(US $)
(US $)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Sales
From unrelated parties
$ 27,371 $ 23,108 $ 12,010 $ 7,341
From related parties
240 314 57 140
27,611 23,422 12,067 7,481
Cost of sales
22,483 13,123 9,996 3,366
Gross margin
5,128 10,299 2,071 4,115
Operating expenses
Sales and marketing expenses
4,092 2,007 1,997 617
General and administrative expenses
3,023 4,690 1,014 1,544
Research and development expenses
1,417 1,490 525 578
8,532 8,187 3,536 2,739
(Loss)/income from operations
(3,404 ) 2,112 (1,465 ) 1,376
Other income (expenses)
Interest income
91 94 31 30
Interest expense
(38 ) (10 ) (6 ) (10 )
Gain on disposal of VIE
266 - 266 -
Other expenses
(12 ) (12 ) (9 ) (10 )
307 72 282 10
(Loss)/income before income tax expense, equity method investments and noncontrolling interests
(3,097 ) 2,184 (1,183 ) 1,386
Income tax benefit/(expense)
39 (469 ) 159 (201 )
(Loss)/income before equity method investments and noncontrolling interests
(3,058 ) 1,715 (1,024 ) 1,185
Share of gain/(loss) in equity investment affiliates
49 (170 ) 107 (45 )
Net (loss)/income
(3,009 ) 1,545 (917 ) 1,140
Net loss attributable to noncontrolling interests
103 78 10 19
Net (loss)/income attributable to ChinaNet Online Holdings, Inc.
$ (2,906 ) $ 1,623 $ (907 ) $ 1,159
Nine Months Ended
September 30,
Three Months Ended
September 30,
2014
2013
2014
2013
(US $)
(US $)
(US $)
(US $)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Net (loss)/income
(3,009 ) 1,545 (917 ) 1,140
Foreign currency translation (loss)/gain
(271 ) 1,076 10 248
Comprehensive (Loss)/income
$ (3,280 ) $ 2,621 $ (907 ) $ 1,388
Comprehensive loss attributable to noncontrolling interests
102 71 10 24
Comprehensive (loss)/income attributable to ChinaNet Online Holdings, Inc.
$ (3,178 ) $ 2,692 $ (897 ) $ 1,412
(Loss)/earnings per share
(Loss)/earnings per common share
Basic
$ (0.13 ) $ 0.07 $ (0.04 ) $ 0.05
Diluted
$ (0.13 ) $ 0.07 $ (0.04 ) $ 0.05
Weighted average number of common shares outstanding:
Basic
22,385,478 22,253,463 22,403,062 22,371,649
Diluted
22,385,478 22,253,463 22,403,062 22,371,649
Management Discussion and Analysis
Total Revenues: For the nine months ended September 30, 2014, our total revenues increased to US$27.61 million from US$23.42 million for the nine months ended September 30, 2013. For the three months ended September 30, 2014, our total revenues increased to US$12.07 million from US$7.48 million for the three months ended September 30, 2013. The increase in our total revenues for the nine and three months ended September 30, 2014 was primarily due to the increase in our search engine marketing service revenue during the periods。
Net (loss)/income attributable to ChinaNet Online Holdings, Inc.: Total net (loss)/income as adjusted by the net loss attributable to the noncontrolling interest as discussed above yields the net (loss)/income attributable to ChinaNet Online Holdings, Inc. Net loss attributable to ChinaNet Online Holdings, Inc. was approximately US$2.91 million and US$0.91 million for the nine and three months ended September 30, 2014, respectively. For the nine and three months ended September 30, 2013, net income attributable to ChinaNet Online Holdings, Inc. was approximately US$1.62 million and US$1.16 million, respectively.
Investor Alert
Item 8.01. Other Events.
On June 11, 2014, NASDAQ Staff notified the Company that its common stock failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days as required by NASDAQ Listing Rules. The Staff also notified the Company that it had been granted a grace period of 180 calendar days in which to regain compliance with respect to its bid price. In the letter dated September 30, 2014, the Staff informed the Company that it had determined that the closing bid price of the Company's common stock had been at $1.00 per share or greater for 10 consecutive business days from September 16, 2014 to September 29, 2014. Accordingly, the Company has regained compliance with NASDAQ Listing Rule 5450(a)(1) and this matter was closed.
On October 1, 2014, the Company issued a press release with respect to regaining compliance with the NASDAQ listing requirement, a copy of which is attached as Exhibit 99.1 and is incorporated herein by reference.
Comments & Business Outlook
Six Months Ended June 30,
Three Months Ended June 30,
2014
2013
2014
2013
(US $)
(US $)
(US $)
(US $)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Sales
From unrelated parties
$ 15,361
$ 15,767
$ 10,179
$ 8,777
From related parties
183
174
182
115
15,544
15,941
10,361
8,892
Cost of sales
12,487
9,757
8,665
5,290
Gross margin
3,057
6,184
1,696
3,602
Operating expenses
Selling expenses
2,095
1,390
1,506
602
General and administrative expenses
2,009
3,146
1,022
1,744
Research and development expenses
892
912
442
463
4,996
5,448
2,970
2,809
(Loss)/income from operations
(1,939 )
736
(1,274 )
793
Other income (expenses)
Interest income
60
64
29
32
Interest expense
(32 )
-
(16 )
-
Other expenses
(3 )
(2 )
(2 )
(1 )
25
62
11
31
(Loss)/income before income tax expense, equity method investments and noncontrolling interests
(1,914 )
798
(1,263 )
824
Income tax expense
(120 )
(268 )
(72 )
(354 )
(Loss)/income before equity method investments and noncontrolling interests
(2,034 )
530
(1,335 )
470
Share of losses in equity investment affiliates
(58 )
(125 )
(43 )
(54 )
Net (loss)/income
(2,092 )
405
(1,378 )
416
Net loss attributable to noncontrolling interests
93
59
47
18
Net (loss)/income attributable to ChinaNet Online Holdings, Inc.
(1,999 )
464
(1,331 )
434
Management Discussion and Analysis
Total Revenues: Our total revenues were US$15.54 million and US$15.94 million for the six months ended June 30, 2014 and 2013, respectively. For the three months ended June 30, 2014, our total revenues increased to US$10.36 million from US$8.89 million for the three months ended June 30, 2013. The increase in our total revenues for the three months ended June 30, 2014 was primarily due to the increase in our search engine marketing service revenue during the period, which is discussed in detail in our revenue analysis section below.
Net (loss)/income attributable to ChinaNet Online Holdings, Inc.: Total net (loss)/income as adjusted by the net loss attributable to the noncontrolling interest as discussed above yields the net (loss)/income attributable to ChinaNet Online Holdings, Inc. Net loss attributable to ChinaNet Online Holdings, Inc. was approximately US$2.0 million and US$1.33 million for the six and three months ended June 30, 2014, respectively. For the six and three months ended June 30, 2013, net income attributable to ChinaNet Online Holdings, Inc. was approximately US$0.46 million and US$0.43 million, respectively.
Investor Alert
Item 8.01. Other Events.
complies with Listing Rule 5250(c)(1).
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME
(In thousands)
Three Months Ended March 31,
2014
2013
(US $)
(US $)
(Unaudited)
(Unaudited)
Sales
From unrelated parties
$ 5,182 $ 6,990
From related parties
1 59
5,183 7,049
Cost of sales
3,822 4,467
Gross margin
1,361 2,582
Operating expenses
Selling expenses
589 788
General and administrative expenses
987 1,402
Research and development expenses
450 449
2,026 2,639
Loss from operations
(665 ) (57 )
Other income (expenses)
Interest income
31 32
Interest expense
(16 ) -
Other expenses
(1 ) (1 )
14 31
Loss before income tax expense, equity method investments and noncontrolling interests
(651 ) (26 )
Income tax (expense)/benefit
(48 ) 86
(Loss)/income before equity method investments and noncontrolling interests
(699 ) 60
Share of losses in equity investment affiliates
(15 ) (71 )
Net loss
(714 ) (11 )
Net loss attributable to noncontrolling interests
46 41
Net (loss)/income attributable to ChinaNet Online Holdings, Inc.
(668 ) 30
Three Months Ended March 31,
2014
2013
(US $)
(US $)
(Unaudited)
(Unaudited)
Net loss
(714 ) (11 )
Foreign currency translation (loss)/gain
(324 ) 215
Comprehensive (loss)/income
$ (1,038 ) $ 204
Comprehensive loss attributable to noncontrolling interests
45 38
Comprehensive (loss)/income attributable to ChinaNet Online Holdings, Inc.
$ (993 ) $ 242
(Loss)/earnings per share
(Loss)/earnings per common share
Basic
$ (0.03 ) $ 0.00
Diluted
$ (0.03 ) $ 0.00
Weighted average number of common shares outstanding:
Basic
22,376,540 22,186,540
Diluted
22,376,540 22,186,540
Management Discussion and Analysis
Total Revenues
Our total revenues decreased to US$5.18 million for the three months ended March 31, 2014 from US$7.05 million for the three months ended March 31, 2013, representing a 26% decrease. This decrease is primarily due to the decrease in internet advertising and related technical service revenue and TV advertising revenue of approximately 6% and 55%, respectively, during the three months ended March 31, 2014 as compared to the same period of last year.
Total net loss as adjusted by the net loss attributable to the noncontrolling interest shareholders as discussed above yields the net (loss)/income attributable to ChinaNet Online Holdings, Inc. Our net loss attributable to ChinaNet Online Holdigs, Inc. was approximately US$0.67 million for the three months ended March 31, 2014 as compared to a net income attributable to ChinaNet Online Holdings, Inc. of approximately US$0.03 million for the three months ended March 31, 2013.
Investor Alert
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
Comments & Business Outlook
Year Ended December 31,
2013
2012
(US $)
(US $)
Sales
From unrelated parties
$ 29,932 $ 46,403
From related parties
361 197
30,293 46,600
Cost of sales
16,563 31,558
Gross margin
13,730 15,042
Operating expenses
Selling expenses
2,574 2,683
General and administrative expenses
7,691 6,030
Research and development expenses
1,995 1,819
12,260 10,532
Income from operations
1,470 4,510
Other income (expenses)
Interest income
125 186
Interest expense
(26 ) -
Change in fair value of contingent consideration receivables
- (160 )
Loss on disposal of intangible asset
(315 ) -
Loss on disposal of subsidiaries
(543 ) -
Other income (expenses)
5 (150 )
(754 ) (124 )
Income before income tax expense, equity method investments and noncontrolling interests
716 4,386
Income tax expense
(816 ) (529 )
Loss/income before equity method investments and noncontrolling interests
(100 ) 3,857
Share of losses in equity investment affiliates
(183 ) (449 )
Net loss/income
(283 ) 3,408
Net loss/(income) attributable to noncontrolling interests
49 (412 )
Net loss/income attributable to ChinaNet Online Holdings, Inc.
$ (234 ) $ 2,996
Management Discussion and Analysis
Total Revenues
Our total revenues decreased to US$30.29 million for the year ended December 31, 2013 from US$46.60 million for the year ended December 31, 2012. Excluding the business tax expenses included in revenue for the year ended December 31, 2012 of approximately US$1.22 million before the launching of the Pilot Program commencing on September 1, 2012 in Beijing, November 1, 2012 in Fujian province and December 1, 2012 in Hubei province, we achieved approximately US$30.29 million and US$45.38 million of revenue for the years ended December 31, 2013 and 2012, respectively, which representing a 33% decrease. The decrease was primarily due to the significant decrease in low margin TV advertising revenue for the year ended December 31, 2013 as compared to that achieved in last year.
Net loss/income attributable to ChinaNet Online Holdings, Inc.
Total net loss/income as adjusted by the net loss/income attributable to the noncontrolling interest shareholders as discussed above yields the net loss/income attributable to ChinaNet Online Holdings, Inc. Net loss attributable to ChinaNet Online Holdings, Inc. was US$0.23 million for the year ended December 31, 2013 as compared to a net income attributable to ChinaNet Online Holdings, Inc. of US$3.00 million for the year ended December 31, 2012.
Investor Alert
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
According to the Listing Rule 5810, the Company now has a period of 180 calendar days from such letter , or until December 8, 2014, to regain compliance. Compliance can be achieved by meeting the standard of a minimum bid price of $1 per share for a minimum of 10 consecutive business days at any time during the 180 day period. The Company is currently looking at all of the options available with respect to regaining such compliance.
Investor Alert
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
By an additional letter dated May 22, 2014, the Listing Qualifications Department of the NASDAQ Stock Market LLC ("NASDAQ") advised ChinaNet Online Holdings, Inc. (the "Company") that the Company does not comply with NASDAQ Listing Rule 5250(c)(1) for continued listing because NASDAQ has not received the Company's Form 10-Q for the period ended March 31, 2014, and the Company remains delinquent in filing its annual report on Form 10-K for the fiscal year ended December 31, 2013. NASDAQ has informed the Company that it has until June 16, 2014 to submit a plan to regain compliance with respect to these delinquent reports in accordance with a delinquency letter the Company received from NASDAQ dated April 16, 2014. If NASDAQ approves the Company's plan, it has the discretion to grant the Company an extension of up to 180 calendar days from the due date of the Form 10-K (or until October 13, 2014) to regain compliance.
The Company is continuing to work diligently to complete the Form 10-K and the Form 10-Q. If the Company is unable to file these two reports by June 16, 2014, it intends to file a plan to regain compliance with NASDAQ. This notification has no immediate effect on the listing of the Company's common stock on NASDAQ. There can be no assurance, however, that the Company will be able to regain compliance with the listing requirements discussed above or otherwise satisfy the other NASDAQ listing criteria.
Investor Alert
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
By a letter dated April 16, 2014, the Listing Qualifications Department of the NASDAQ Stock Market LLC (“NASDAQ”) advised ChinaNet Online Holdings, Inc. (the “Company”) that it no longer complies with the NASDAQ Listing Rule 5250(c)(1) for continued listing due to the Company’s inability to file with the Securities and Exchange Commission its annual report on Form 10-K for the fiscal year ended December 31, 2013 on a timely basis, and that the Company has 60 calendar days (or until June 16, 2014) to submit a plan explaining how it expects to regain compliance. If NASDAQ approves the Company’s plan, it can grant the Company an extension of up to 180 calendar days from the due date of the Form 10-K (or until October 13, 2014) to regain compliance. The Company anticipates that it will be able to file the Form 10-K substantially prior to the expiration of such 60-day period and regain compliance with the NASDAQ Listing Rules. If the Company is unable to file its Form 10-K within the 60-day period, it intends to file with the NASDAQ a plan to regain compliance within the Listing Rules of the NASDAQ. Acceptance of such plan is discretionary with the NASDAQ. This notification has no immediate effect on the listing of the Company’s common stock on the NASDAQ. There can be no assurance, however, that the Company will be able to regain compliance with the listing requirement discussed above or otherwise satisfy the other NASDAQ listing criteria.
Investor Alert
Item 8.01. Other Events. On March 31, 2014, ChinaNet Online Holdings, Inc. (the “Company”) filed a Form 12b-25, Notification of Late Filing, with the Securities and Exchange Commission (the “SEC”) with regard to its Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (the “2013 Form 10-K”), indicating that the Company would not be able to file the 2013 Form 10-K within the prescribed time period, and that the 2013 Form 10-K would be filed on or before the fifteenth calendar day following the prescribed due date.
On April 15, 2014, the Company determined that it would not be able to file the 2013 Form 10-K by April 15, 2014 due to the fact that management of the Company was unable to timely finalize the Company's financial statements, footnotes and related disclosures without assistance and supervision of Mr. George Chu, the Company’s Chief Operating Officer who has been hospitalized. The Company is working diligently to complete the 2013 Form 10-K and will file it as soon as practicable.
Investor Alert
Item 8.01. Other Events.
In a letter dated March 6, 2014, The NASDAQ Stock Market LLC (“NASDAQ”) notified ChinaNet Online Holdings, Inc. (the “Company”) that it has regained compliance with the minimum bid price requirement of $1.00 per share for continued listing on the stock exchange. It’s the Company’s common stock achieved a closing bid price of more than $1.00 for 10 consecutive business days from February 20, 2014 to March 5, 2014.
On April 30, 2013, the Company received a letter from NASDAQ stating that for 30 consecutive business days immediately preceding the date of the letter the Company's common stock did not maintain a minimum closing bid price of $1.00 per share ("Minimum Bid Price Requirement") as required by NASDAQ Listing Rule 5450(a)(1). The Company was provided 180 calendar days to regain compliance.
In a letter dated October 28, 2013, NASDAQ notified the Company that it is eligible for an additional 180-day period, or until April 28, 2014, to regain compliance with the Minimum Bid Price Requirement. In connection with the grant of the additional 180-day period, the listing of the Company’s common stock was transferred, at the Company’s request, to the NASDAQ Capital Market under the existing ticker symbol (CNET) at the opening of business on October 29, 2013. In the October 28, 2013 letter, NASDAQ stated that although the Company had not regained compliance with the Minimum Bid Price Requirement by October 28, 2013, it was eligible for an additional 180-day compliance period, or until April 28, 2014, to cure the deficiency with respect to its bid price.
On March 10, 2014, the Company issued a press release with respect to regaining compliance with the NASDAQ listing requirement, a copy of which is attached as Exhibit 99.1 and is incorporated herein by reference.
Comments & Business Outlook
Six Months Ended June 30,
Three Months Ended June 30,
2013
2012
2013
2012
(US $)
(US $)
(US $)
(US $)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Sales
From unrelated parties
$ 15,767 $ 27,996 $ 8,777 $ 13,076
From related parties
174 66 115 51
15,941 28,062 8,892 13,127
Cost of sales
9,757 21,902 5,290 9,364
Gross margin
6,184 6,160 3,602 3,763
Operating expenses
Selling expenses
1,390 1,402 602 713
General and administrative expenses
3,146 3,060 1,744 1,817
Research and development expenses
912 756 463 425
5,448 5,218 2,809 2,955
Income from operations
736 942 793 808
Other income (expenses)
Interest income
64 121 32 116
Other (expenses)/income
(2 ) - (1 ) 1
62 121 31 117
Income before income tax expense, equity method investments and noncontrolling interests
798
1,063
824 925
Income tax benefit / (expense)
(268 ) (14 ) (354 ) 222
Income before equity method investments and noncontrolling interests
530 1,049 470 1,147
Share of losses in equity investment affiliates
(125 ) (297 ) (54 ) (104 )
Net income
405 752 416 1,043
Net loss / (income) attributable to noncontrolling interests
59 (223 ) 18 (148 )
Net income attributable to ChinaNet Online Holdings, Inc.
464 529 434 895
Investor Presentations
